ASSIGNMENT

ON

SECURITY ANALYSIS &

PORTFOLIO MANAGEMENT

SUBMITTED BY : MUSKAN SINGH

SUBMITTED TO : AKHILESH MISHRA
ROLL NO. : GM19100
SECTION : B

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1. CASE TITLE

The case title is “How HR caused Toyota to crash.”

2. SUMMARY

Toyota is one of the renowned organizations in the global automotive sector which has its
business located in various regions across the world. Toyota has been highly appraised in
terms of the business philosophies established by Toyota which is more popularly known as
“Toyota Way”. However the “Recall” crisis of Toyota exposed the organization to the media
and public scrutiny and this has highlighted the slow response, lack of executive reporting
structure and improper communication practices amongst the different functioning units and
locations of the organization. Toyota practices a strong globally centralized structure which
requires to be balanced along with better human resource management policies and structures
to effectively manage the diverse workforce of the organization. The different aspects of the
organization inclusive of the legal, cultural and operational functions reflects that Toyota
practices has conflicted its own strategies and philosophies of doing things “Toyota Way” to
induce expansion and growth and requires reformation in their structure and function to better
incorporate their business values.

To understand the different internal functions and dimensions of Toyota and how it has been
effective in context of the “recall debacle” of the company. The case study helps to
understand the critical problems and the analysis for the crisis of Toyota. An attempt has been
made to critically evaluate the recognized reasons more explicitly and also induces the
measures through which the current strategies and processes of Toyota could be developed.
The focus has been on the management of the diverse workforce of Toyota and the related
concerns regarding the empowering and decentralizing the structure of Toyota to effectively
follow the “Toyota Way” for achieving the organizational objectives. Toyota should redesign
its human resource practices so that it can achieve an organizational culture in which
Toyota’s people are dedicated towards adhering principles mentioned under Toyota Way. It
should take proper and effective training and development strategies like counselling,
mentoring and coaching in order to make its people understand importance of its principles. It
should also encourage a system of open communication and quick circulation of information
so that corrective measures can be taken at the right time. Toyota is an international company

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thus it is essential for the company to ensure it is able to maintain its reputation across the
world. Such recalls and problems arising out of inappropriate human resource practices result
in negative goodwill for the organization. Toyota should ensure that its human resource
practices are effective and help organization achieve its goals and objectives.

3. PROBLEMS & ISSUES

• The issues that Toyota faced on eight of their models were due to human resources
professionals producing faulty pedals, computer problems and product design. Employees
unsuccessfully failed to perform the job as well as management not giving the proper
training. Ultimately, human error was the root cause of the problems that Toyota faced.
Having a weak human resources department causes problems in any company, especially
when you are making a product for consumers.

• In Business Week projected that Toyota is losing an astonishing $155 million dollars per
week from the recalls and over $30 billion in stocks. The impact has cost the company
billions. Management was aware of the mechanical issues, but hide the problem to keep
Toyota’s brand in tack. Also, the organization rewarded managers because they kept cost
down than having product quality. This created big incentives for management to
overlook the problems that existed. Employees failed to make the right decision
concerning the issues and problem, taking abrupt action and examining the HR processes
that influenced the decision of staff employees and management. There was a lapse in
training among the employees.

• Toyota has faced many legal concerns in the organization over the past couple of years
due to thousands of recalls on their vehicles. Faulty brakes and product failures was a big
issue for Toyota. These concerns should have been addressed during the manufacturing
process, but the employees and management did not adhere to issues soon enough before
the problems became exculpated. The organization should have taken a closer look at the
processes and their employees. The HR need to have a risk assessment team that
calculates and identifies mistakes caused by employees that demonstrates weak processes.

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 • The legal issues that Toyota has faced need to be addressed by senior management
looking at their processes and fixing the problems that have surfaced. Making sure that all
vehicles are fixed and reassuring that there will be no more problems and that safety is
Toyota’s number one goal. Determine how the organization should address current
human resource issues concerning expanding into international markets.

4. CASE ANALYSIS

S.NO. STRENTGH WEAKNESSES OPPORTUNITIES RISK THREAT

1. 1. Strong brand image Dependence on The growth of The worldwide No. of
suppliers developing nations automotive competitors
market is highly
competitive.
2. Global supply Not grabbing Green vehicle The worldwide High –
chain markets technology automotive priced raw
industry is materials
highly volatile.
3 Rapid innovation Negative Growing concern Toyota’s Lower
capabilities publicity for environmental operations are profits
pollution subject to
currency and
interest rate
fluctuations.
4. Strong Poor brand Weak Japanese Yen The automotive Fluctuations
diversified portfolio recognition vs. U.S. Dollar industry is in the price
subject to of fuel
various
governmental
regulations
5. Advanced Passenger safety Growing interest in Toyota may Passenger
Technology issues in the past advanced become subject health and
and product electronics in to various legal safety
recalls vehicles proceedings. issues
6. High production Lack of Balance price Toyota’s success Effects of
capability flexibility due to & production to is significantly global
large size capture the Asian impacted by its recession
market ability to and
maintain and pandemics
develop its brand
image

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5. SUGGESTIONS

• There are several that need to considered such as training, performance, hiring and
rewards.
• Toyota needs to handle their reward processes by encouraging the right attitude the
behaviour in their employee.
• The purpose of training is to make sure that everyone has the right capabilities and skills
to handle any problem they may encounter.
• The Human Resource department need to make sure that all staff is trained properly and
management understand the importance of safety and having quality automobiles than
high error free numbers.
• Need to hire qualified and skilled individual that is capable of doing the job.
• Management need to ensure that the performance measuring the system is being
monitored for errors.
• HR need to make sure the culture of the company is adhered by all staff and that the core
values that Toyota having is being implemented.

6. RECOMMENDATIONS

• The first HRM problem identified was the issue of rewards and recognition. In a
competitive business environment that is in existence today, retaining the
workforce has proved to be a challenge. However, employee reward and
recognition programs are some of the methods of motivating employees to stick
with the organization. Toyota Motor Company should come up with reward
programs that recognize hard working individuals. Such programs should not
necessarily be monetary in nature but could be in form of rewarding employees
with holiday packages or paid leaves. Companies with reward and recognition
mechanisms had better chances of retaining its employees.

• Training was also identified as another HRM issue that Toyota Motor Company
had to grapple with for a long time. Asserts that poorly trained employees is an

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 HRM issue and are a liability to organizations as they may not be productive
enough to meet the goals of the organization. Many organizations train their
employees once and let them go on carrying their duties. However, learning is not
a ‘one time affair’ at all. Training should be conducted or carried reg ularly to
ensure that employees keep up with changing trends. Toyota Motor Company
should ensure that they carry out regular training activities as changes in the
environment are always occurring and the need to keep up with changing business
environment is crucial for companies willing to remain relevant in an ever
changing and dynamic business environment. By carrying regular training
programs, Toyota would be able to identify training gaps or problems that need to
be addressed.

• At Toyota Motor Company, it was evident that the hiring process was another
significant HRM issue facing the company. As noted earlier in the text, Toyota
Motor Company had to recall millions of its cars worldwide after it was found out
that majority of their cars had a number of manufacturing defects that had been
ignored by the company. To some extent, it was evident that Toyota Motors hiring
process did not recruit the right personnel able to detect problems early enough
before releasing their products into the market. However, such can be improved.
Toyota Motors is one of the largest manufacturers of automobiles in the globe.
Such a company needs to take seriously its hiring process. This can be done by
carrying out an intensive hiring process aimed at ensuring that only the be st
personnel are hired. For instance, the interview process needs to be more intensive
and practical in nature. The interviewees have to be subjected to a series of tests in
order for the company to hire the best possible personnel able to deliver results for
the company.

• Organizations corporate culture or the way of doing things is another HRM issue
identified above. As evident, Toyota’s corporate culture was geared towards more
productivity at the expense of important aspects such as safety. The culture that
had been bred was a culture aimed at rewarding individuals who produced more
regardless of the need to ensure that safety standards were observed. This is the
reason as to why some people argue that theory X of human resource management

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 should be allowed to run in organizations since it calls for strict rules especially
among the employees. At Toyota Motor Company, other than adopting such, a
better way of ensuring that good corporate culture exists is designing structures
that are able to recognize several aspects such as good behaviour, employee
productivity and recognition among others. A good corporate culture can bring in a
lot of benefits to the organization as it is a breeding ground for positive or good
behaviour.

• Leadership issues affect many companies across the globe. A lot of firms suffer
from poor transition processes hence affecting a lot of its operations. At Toyota
Motors, it was evident that the leadership failed in its duties of directing the
organization towards the right path. The leadership was aware of the defects in a
number of its products but failed to act. Improved leadership is the key to this.
Organizations should choose its leaders based on merit, productivity and
experience. More importantly, successive or transition processes should be
designed early enough so as to ensure that leaders who retire or leave work due to
other reasons are replaced with ease. Leaders to be have to be informed and trained
early enough so as to ensure that the gaps left behind do not harm the operations of
the whole organization.

• Without having performance management processes that are able to monitor

employee performance, a lot of organizations risk making losses as they will not
be in a position to determine or differentiate productive and unproductive
employees. Employees who meet their targets are a dream for all organizations
willing to remain relevant in an ever competitive business environment that exists
today. Toyota was not in a position to monitor employee performance at all.
However, such can be improved by setting targets for each employee and making
sure that employees work to meet them. This can also be supplemented by carrying
out constant supervision to ensure that employees are working.

• On grounds of risk assessment, it was evident that such was l acking at Toyota
Motor Company. It is important for businesses to have a risk assessment team able
to detect unforeseen problems that the company might face in the foreseeable
future. A firm such as Toyota Motor Company has to come up with risk assessment

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 strategies aimed at ensuring that potential risks can be seen or forecasted early
enough before they occur. Some of the best risk assessment strategies that the
company could adopt include watching and monitoring. Here, the firm should work
on watching and monitoring the environment for any changes that may occur and
which may in the long run affect the operations of the company. By so doing, the
firm will be in a better position to avoid losses such as the one it faced as a result o
massive recalls.

• Employee retention is an important element that must be addressed by all

organizations across the globe. Lately, employee turnover is increasing as
employees look for opportunities in other companies that pays them well or
recognizes their efforts. At Toyota Motor Company, it was evident that turnover
rates were so high hence affecting the company’s operations significantly.
However, this problem can be solved by coming up with retention strategies able
to ensure that organizations keeps some of its top performing workforce. There are
many ways that firms can employ in order to retain some of their top -performing
employees. For instance, a company such as Toyota can improve its recognition
and reward systems and design them in a manner that it attracts and motiva tes
people to stick to the organization for long. For instance, the company can come
up with plans of ensuring that top performers enjoy a fully paid trip to their
country of choice for holiday. This is just one way that the firm can employ to
retain its employees.

7. CONCLUSION

As a HR manager the steps that should be taken are :

a. Strategic Partners
• Act as an essential part of the commerce team.
• Connect the business team in methodical organizational audits resultant in clear priorities.
• Give HR resources to the trade.
• Possess clear understanding of current business circumstances (internal and outside).

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b. Administrative Experts

• Develop and manage rule, plans, and policies for efficiently managing human capital.
• Act as consultants in fields of know-how, supporting additional HR professionals and
additional HR clients.
• Take blame for continuous development in programs and operations.

c. Employee Champions

• Speak for employee wants and management anxiety about employee relations.
• Know the employees and foresee their concerns and issues.
• Be approachable by employees.
• Be professional in assisting employees.
• Provide employees with the resources they need for meeting company objectives.

d. Change Agents

• Influence and impel organizational change strategies in sustain of business objectives.

• Manage the process to make sure successful change management.
• Incessantly take the organization’s pulse concerning both internal and external affairs.
• Remain up to date about implements and practices of change in order to successfully and
efficiently run change and react to the organization’s needs.

Team performed the HR roles of both employee and strategic partners. The task of the teams
included:

• Development: on job development, section-specific training, coaching, process

improvement, section business and strategic planning.
• Employee Relations — employee advocate, peer reviews, concern resolutions, safety and
health.

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• HR Systems — rewarded promotions up to assistant manager, training for salaried
members, salaried relations.

HR and manufacturing would put effort on the annual business tactics together, resulting in
improved collaboration and addition of the two departments, while at the similar time
preventing a number of the team member concerns as of coming up like they used to.

In other words, if considering manufacturing and HR are two silos and Toyota divide HR into
small teams to work with management, it would assist the collaboration of each although
make it harder to make sure fairness and constancy across all of the departments. For this
motive, the team suggested that there will still be an essential HR administration group that
would be dividing into specific functions consecutively to address the problem that was
pointed. The group consisted of the subsequent functions:

➢ Personnel — Comp/benefits, payroll, transfer system, staffing and recruiting

➢ Health and Safety — Medical leave of absence, early symptom investigation support,
Disabilities Act, data reporting, health evaluation, workers’ comp, family and medical
leave.
➢ Employee Relations – Communications, Policy development and training, recognition.
➢ Training — Team leader training, Promotion process, problem solving training, quality
encircle, plant-wide training.

The central group now had the aptitude to focus on planning and policy setting and would
turn out to be the experts of their own areas.

Increasingly, change management would be seen as a permanent function to improve

competence and keep organization flexible to the competitive market. Organization
strategically employs change to improve organizational efficiency. But bringing about
endearing change in today’s competitive surroundings requires thoughtful planning, effectual
communication and employee acceptance.

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8. QUESTION AND ANSWER

Q1. Did Toyota have a poorly designed hiring process that allowed it to hire individuals who
were not experienced in the required constructive confrontation technique? Were their hires
poor learners that did not change as a result of company training?

Ans. Hiring has always and will always be a HRM issue. The main objectives of great
hiring is to ensure that companies bring on board individuals who are top performers
who posses high level of skills and knowledge required to handle some of the
organization’s complex problems. It is important to note that poorly designed forms of
recruitment and assessment can significantly result in hiring employees who may
ignore a lot of issues which may end up affecting the company. Hiring was identified
as one HRM issue that Toyota had to deal with. The company’s hiring process was
poorly designed especially by the HRM department as some employees not
experienced in the required constructive confrontation technique were hired hence
affecting the company on a global scale. It is argued that some of their hires were poor
learners who could not change even after being subjected to training.

Q2. Was the performance appraisal and performance monitoring process so poorly designed
that they did not identify and report groupthink type errors? Did Toyota’s famous high level
of trust of its employees go too far without reasonable metrics, checks, and balances? Did HR
develop sophisticated metrics that produced alerts to warn senior managers before minor
problems got out of control?

Ans. One of the main objectives of performance management processes is to ensure

that performance is periodically monitored and appraised so as to identify a given
problem early enough and eradicate it before it gets out of hand. More importantl y,
this is a HRM role or issue that affects a lot of companies across the globe. If the
human resource department at Toyota Motors properly designed in a manner able at
identifying and reporting groupthink type of errors, the company would not have been
faced with massive problems such as recalls and bad company image. The HR failed
to develop some sophisticated metrics designed to produce alerts and subsequently
warn senior managers or leaders before problems occurred.

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Q3. If Toyota’s training was more effective, would the managers involved have been more
successful in convincing executives to act on the negative information received?

Ans. It is argued that the purpose of training is aimed at making sure that employees
have the right skill or capabilities to discover and subsequently handle all situations
that they encounter whether easy or hard. Training is regarded as one of the most
essential aspects of employee development. Toyota Motor Company is regarded as
one of the best companies known for its four-step cycle of planning, doing, checking
and acting. However, as it seems, managers and other leaders in the organization
failed to ensure that the last two (checking and acting) was greatly emphasized. In an
environment where safety is a crucial factor, the human resource management
department needs to ensure that training employees on such areas has been done
successfully. As evident, Toyota’s training was not as effective as such as its
engineers went ahead and designed faulty cars that led to thousands of cars being
recalled.

Q4. Should HR work with risk-assessment experts and build the capability of identifying and
quantifying the revenue impacts of major HR errors, including a high hiring failure rate, a
high turnover rate among top performers, and the cost of keeping a bad manager or
employee?

Ans. Many HR departments in a couple of organizations across the globe do not even
have a risk assessment team tasked with identifying and calculating risks resulting due
to weak employee processes. Risk assessment is a HR issue that Toyota’s human
resource department ought to have considered in order to ensure that its employees
were capable of calculating long-term actual costs of ignoring product failure
information. HR should have worked with risk assessment team while working on
efforts aimed at identifying and subsequently quantifying revenue impacts of major
human resource errors such as high turnover rates among its top performers.

Q5. Was the leadership process at Toyota so outdated that it produced the wrong kind of
leaders with outdated competencies, who could not successfully operate in the rapidly
changing automotive industry?

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Ans. Leadership is an important element in any given organization. The purpose of
leadership development and succession planning processes is to ensure that leaders or
managers with the right skills and decision-making abilities are placed into key
leadership positions. It is highly likely that the human resource department at Toyota
Motors failed to come up with efficient leadership processes aimed at making key
decisions. The type of leadership at Toyota Motors was outdated producing wrong
leaders with outdated competencies. The HRM department had to grapple with
leadership development and succession challenges as they could not get managers who
could successfully operate in the rapidly changing automotive industry.

Q6. Did the retention program ignore people that brought up problems and as a result, did
these whistle blowers often leave out of frustration?

Ans. Retention is also another HRM issue. The main purpose of any retention program
is to identify and keep or retain an organization’s top performers and individuals who
possess mission-critical skills. Retention is a HRM issue that was not properly
addressed by Toyota Motor Company as the retention program of the firm ignored
people that brought a lot of problems to the company.

Q7. Did HR’s failure to measure or monitor the corporate culture contribute to its
misalignment? Was the corporate culture (the Toyota Way) so biased toward positive
information that employees learned not to make waves, in spite of their professional
responsibility to be heard on safety issues?

Ans. In any organization, the role of corporate culture is to informally drive the
behaviour of employees in order to ensure that it closely adheres to the core values of
the company. The HRM department needs to ensure that organizations monitor their
corporate cultures rather than assuming them. As with the case of Toyota Motor
Company, it appears that the corporate culture that had been fostered all along was
aimed at “saving face.” The human resource department of Toyota Motors failed to
measure the company’s corporate culture that resulted in its misalignment. In addition,
the culture of the company was biased towards positive information but making
preference on aspects such as cost containment.

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